Practical Ecommerce

How I measure ecommerce success

Most merchants measure ecommerce success by revenue.

Shopify’s dashboard notes tell me my website is in the top five percent of those launched in the last 12 months. But I don’t know if Shopify runs this message to sustain retailer confidence in its platform, or if my achievement is based on revenue growth.

Regardless, here are 10 ways that I measure the success of my ecommerce business.

Higher profit. The initial stages of launching and promoting a website are incredibly expensive. It takes time to make sales, too. Turnover is the starting point. But what matters is when your turnover turns into “leftover” — i.e., you’ve got money left over at the end of the month. (Confession: April is the first month I’ve broken even.)

Higher order value. If the amount of your average order is increasing, customers are showing more confidence in your products. My average order value rose from $82 in the first quarter I launched (April to June 2015) to $175 for the most recent quarter (January to March 2016). For the quarter beginning on April 1, 2016, my AOV is $667. However, since I have not completed the quarter, it is unlikely to remain that high.

Corporate customers. One market I had not considered was corporate event planners and stylists. Fortunately, they discovered my themed decor and ordered, much to my surprise. Corporate clients have larger budgets than consumers (in my case, brides), and make more repeat orders (unlike brides who marry once, usually). Corporate clients comprise 10 percent of my customers but have contributed 39 percent of my revenue in the last 12 months. They also have an average order value of $778 compared to my brides’ AOV of $195.

Repeat customers. Obtaining repeat orders takes time. After their initial purchase, customers must have a need to shop with you again. My repeat orders, while modest, have all occurred in 2016.

Growing product assortment. I launched My Wedding Decor with about 80 themed wedding decoration products. I now have more than 400. My initial product range was small as I approached suppliers and worked out my categories. A bigger range gives my shoppers more to choose from, and therefore more reason to return.

Easier to attract suppliers. When my website was brand new — and, worse, when it hadn’t launched — it was difficult to attract suppliers. As I get more acceptances than rejections, and indeed when suppliers start contacting me to suggest their products, my confidence and success grows.

Shorter inventory time. Retailers presumably stock items they believe will sell. But if the items do not sell, retailers should sell them cheaply to get rid of them. When I started stocking more items that sell as quickly or better than before, the time my money sits on the shelf shortens.

Bigger volumes. When they launch their ecommerce sites, merchants often don’t have much cash to buy stock. They have to buy smaller quantities at less favorable rates. When I realized what’s definitely going to sell, I started placing larger wholesale orders, which means I can sell them to more customers at a more profitable price.

Growing database. It takes time to grow a database of newsletter subscribers. I market to brides. While my database has grown 18 percent in the last six months (over the previous six months), brides tend to unsubscribe once they’ve married. So this remains an area that I need to improve.

Higher profile. When new customers mention that they keep seeing my company name, it increases my credibility and makes it much easier to obtain their orders.

What measures do you use to know your ecommerce business is a success?

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Comments ( 2 )

  1. Sam Bayer May 6, 2016 Reply

    How about less inbound support emails and phone calls? We also recommend conducting regular Net Promoter Score surveys and strive to have those numbers continuously move upwards. Lastly, in our B2B scenarios, we look for increasing support and usage from the sales force.

  2. Elizabeth Hollingsworth May 9, 2016 Reply

    Thanks for your comment Sam. I am a little unclear if you mean you measure ecommerce success by receiving less inbound support emails and phone calls for B2B? Are you trying to pre-answer typical support questions in the FAQs?